Keppel DC REIT is a remarkable player in the Singaporean real estate investment trust (REIT) sector. Unlike other REITs that focus on conventional properties such as office buildings, shopping malls, or hotels, Keppel DC REIT specializes in data centre properties that store and process digital data. This reflects a forward-looking investment strategy that aligns with the growing demand for data services in the digital age. In this article, we will explore 10 aspects of Keppel DC REIT that reveal its unique position and potential in the Singaporean market.

Keppel DC REIT has a diversified portfolio of data centre properties that span across different regions in the world. It owns and operates data centres not only in its home market of Singapore, but also in other countries in the Asia Pacific region such as Australia, China, Malaysia, and South Korea. Moreover, it has a strong presence in Europe, with data centres in Germany, Ireland, Italy, the Netherlands, and the United Kingdom. This geographical diversification allows Keppel DC REIT to reduce its exposure to risks arising from market volatility or regulatory changes in any single region. It also enables Keppel DC REIT to tap into the growth opportunities and demand for data services in various markets, demonstrating a resilient and sound investment structure.

Over the years, Keppel DC REIT has demonstrated solid financial performance with a steady growth in its distribution per unit (DPU). Its financial stability is often seen as a reassuring sign by investors seeking a reliable income stream through REIT investments. 

Keppel DC REIT has delivered a stable distribution per unit (DPU) of 5.051 cents for the first half of 2023, a slight increase of 0.04% from the DPU of 5.049 cents in the same period last year. The DPU growth was supported by the REIT’s resilient portfolio performance, positive rental reversion, and prudent capital management. The REIT’s distributable income rose by 0.2% year-on-year to $91.3 million for the first half of 2023. Based on the closing price of $2.160 per Unit on 30 June 2023, Keppel DC REIT’s annualised distribution yield was 4.68%, down from 5.13% a year ago.
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With a focus on data centre properties, Keppel DC REIT has strategically positioned itself at the forefront of the technological wave, a move that resonates with the modern-day investment narrative significantly intertwined with tech advancements. This particular emphasis on data centres is a reflection of a forward-thinking approach, aligning the REIT's asset portfolio with the infrastructural backbone of the digital age. The assets held by Keppel DC REIT are more than just physical properties; they are pivotal conduits that facilitate the seamless operation and growth of the burgeoning digital economy in Singapore and the regions beyond. As the digital landscape continues to evolve, the demand for reliable and robust data centres escalates, cementing the relevance and the critical role of Keppel DC REIT in this ecosystem.

Furthermore, the strategic focus on data centre properties places Keppel DC REIT in a favorable position within today’s tech-driven investment sphere, attracting investors who are keen on tapping into the digital economy's expansive potential. The REIT is not just a passive player but an active and relevant participant in the digital revolution unfolding within Singapore and across the globe.

The regulatory environment in Singapore is markedly conducive for the growth of Real Estate Investment Trusts (REITs), with Keppel DC REIT being a prime beneficiary of this favorable scenario. The city-state's forward-thinking policies, coupled with a stable political climate, create a nurturing habitat for REITs, fostering a conducive ecosystem for Keppel DC REIT to not only thrive but also progressively expand its footprint across the broader region. This regulatory backbone underscores Singapore's commitment to creating a robust and attractive investment landscape, which in turn, significantly contributes to the success and expansionist narrative of Keppel DC REIT. The established legal framework, coupled with a pro-business government, substantially mitigates bureaucratic hurdles, thereby accelerating the growth trajectory of REITs. This harmonious regulatory ambiance significantly augments Keppel DC REIT’s operational latitude, enabling it to optimally capitalize on emerging market opportunities both within Singapore and in the neighboring regions.
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Keppel DC REIT has actively engaged in adopting sustainability initiatives, showcasing a commitment that goes beyond mere statutory compliance. By diligently working towards reducing energy consumption and minimizing carbon emissions across its operations, the REIT aligns itself with the broader global transition towards sustainable investing. These efforts reflect a forward-thinking approach that not only looks at profitability but also at creating a positive environmental footprint. Such dedication to sustainability attracts eco-conscious investors who are seeking to contribute positively towards environmental preservation through their investments. In a time where the adverse impacts of climate change are becoming increasingly apparent, Keppel DC REIT's proactive stance in embracing eco-friendly practices sets a commendable precedent in the real estate investment trust sector. By doing so, it not only enhances its corporate responsibility profile but also positions itself favorably among investors who are keen on supporting businesses with a robust sustainability ethos.
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Keppel DC REIT has a strong competitive position in the data centre REIT sector, which gives it an edge for long-term growth. It has a dominant market share in Singapore, which is one of the most attractive data centre markets in the world due to its strategic location, robust infrastructure, and favourable business environment. It also has an experienced and capable management team that has a proven track record of executing its growth strategy, enhancing its portfolio quality, and delivering value to its unitholders. Keppel DC REIT’s competitive positioning enables it to leverage on the increasing demand for data services and capture the growth opportunities in this niche yet expanding sector.

Keppel DC REIT stands to benefit from the growing digital economy that offers many investment opportunities. As more businesses in Singapore and across the region adopt digital platforms to enhance their operations, products, and services, the need for data centres will increase accordingly. Data centres are essential for storing, processing, and transmitting large amounts of digital data that power various applications, such as e-commerce, cloud computing, artificial intelligence, and cybersecurity. According to a report by Cushman & Wakefield, the data centre market in Asia Pacific is expected to grow by 27% per annum in the next three years, driven by the rapid digitalisation of businesses and consumers. This presents a favourable outlook for investors who are looking for a REIT that can capitalise on the rising demand for data services and generate stable returns.

Keppel DC REIT is not only a profitable investment vehicle, but also a key player in enhancing the digital infrastructure that is vital to Singapore’s economy. Its investments in data centre properties help to support the technological advancements and innovations that drive the digital transformation of various sectors, such as e-commerce, cloud computing, artificial intelligence, and cybersecurity. By investing in Keppel DC REIT, unitholders are also contributing to the community by enabling the development of a digital ecosystem that fosters innovation, collaboration, and competitiveness. Keppel DC REIT is thus a socially responsible investment that creates value for both its unitholders and the society.
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Like any investment, Keppel DC REIT is not immune to risks and challenges, underlining the necessity for a thorough analysis before diving in. Investors should meticulously weigh a plethora of factors such as market competition, which is ever-evolving in the dynamic realm of real estate investment trusts, especially in a technologically progressive landscape like Singapore. Technological disruptions, too, pose a significant concern as they could potentially alter the operational efficacy and profitability of data centres. Geopolitical uncertainties, on a broader scale, can also impact Keppel DC REIT's performance, particularly given its international asset portfolio. These uncertainties could influence market stability and regulatory frameworks, thereby affecting the REIT's asset value and returns. When considering an investment in Keppel DC REIT, a holistic understanding of these variables is imperative to navigate through the complexities and to align investment decisions with individual risk tolerance and financial objectives.
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The current stock price level for Keppel DC REIT (AJBU.SI) is SGD 2.09 as of September 29, 2023, 19:25:52 PST.

Here are some other price statistics and data for Keppel DC REIT:

• Previous Close: SGD 2.07
• Day's Range: SGD 2.07 - SGD 2.09
• 52-Week Range: SGD 1.60 - SGD 2.30
• Volume: 261,100
• Market Cap: SGD 3.65 billion
• Shares Outstanding: 1.72 billion
• P/E Ratio: 16.64
• Dividend Yield: 4.82%

​Keppel DC REIT has been a relatively strong performer in recent years, with its share price increasing by over 50% since its IPO in 2014. The company is well-positioned to benefit from the continued growth of the data center industry, which is being driven by the increasing demand for cloud computing and other digital services.
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The exploration of Keppel DC REIT opens a window into a dynamic investment landscape intertwined with Singapore’s digital economy. Its distinctive focus on data centre properties carves a unique niche, rendering it a compelling consideration for investors keen on aligning their portfolio with the technological zeitgeist.

Hi there, welcome to “The Investing Iguana”, the YouTube channel where I, Iggy, help you navigate the jungle of personal finance, investing, and retirement planning. In today’s video, we’re going to talk about a hot topic in the world of sustainable investing: BlackRock’s $426 million Climate Action ETF. This is a new fund that was launched on the Singapore Exchange just a few days ago, and it claims to offer investors access to the best-in-class companies in Asia Pacific that are committed to reducing carbon emissions. Sounds pretty cool, right? But what exactly is this fund, how does it work, and is it worth investing in? That’s what we’re going to find out in this video, so buckle up and get ready for a wild ride!
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Before we dive into the details, let me give you a quick overview of what an ETF is. ETF stands for exchange-traded fund, which is a type of investment that tracks the performance of a basket of stocks, bonds, commodities, or other assets. An ETF can be traded on a stock exchange like any other stock, and it usually has a lower cost and higher liquidity than buying individual securities. ETFs are popular among investors who want to diversify their portfolio, gain exposure to a specific market or sector, or follow a certain investment strategy.
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​One of the most common types of ETFs are index ETFs, which track the performance of a market index, such as the S&P 500 or the MSCI World. An index is a collection of securities that represent a certain segment of the market, and it is used as a benchmark to measure the performance of other investments. For example, if you want to invest in the US stock market, you can buy an ETF that tracks the S&P 500 index, which consists of 500 large-cap US companies across various sectors. By doing so, you can get exposure to the entire US market with just one purchase.

However, not all ETFs are created equal. Some ETFs are more focused on specific themes or objectives than others. For example, some ETFs aim to provide higher returns than the market by using active management or smart beta strategies. Others aim to align their investments with certain environmental, social, or governance (ESG) criteria, such as reducing carbon emissions or promoting gender diversity. These are known as sustainable or ESG ETFs, and they are becoming increasingly popular among investors who care about the impact of their investments on society and the planet.
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One of the leading providers of sustainable ETFs is BlackRock, the world’s largest asset manager with over $9 trillion in assets under management. BlackRock has been at the forefront of promoting sustainable investing as a way to achieve better long-term returns and address global challenges such as climate change and social inequality. In fact, BlackRock’s CEO Larry Fink has been sending annual letters to CEOs around the world since 2018, urging them to adopt a more sustainable and stakeholder-oriented approach to business.

One of BlackRock’s initiatives to support sustainable investing is the iShares MSCI Climate Action ETF series, which was launched in 2021 in collaboration with MSCI, a leading provider of ESG indexes and data. The iShares MSCI Climate Action ETF series consists of three funds that track different regional MSCI Climate Action Indexes: one for the US market (ticker: CLMA), one for the Japan market (ticker: CLMJ), and one for the Asia Pacific ex-Japan market (ticker: CLMA). These indexes are designed to provide exposure to companies that are well-positioned for the low-carbon transition while reducing exposure to companies that are exposed to climate risks or have high carbon emissions.
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The iShares MSCI Asia ex-Japan Climate Action ETF (CLMA) is the latest addition to this series, and it was listed on the Singapore Exchange on Sept 14 with support from Prudential and a consortium of investors including Temasek and Singlife. At US$426 million ($579.45 million), CLMA is the largest equity ETF launch in Singapore to-date, and it offers investors convenient access to best-in-class companies across Asia Pacific ex-Japan that are committed to reducing carbon emissions.
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But how does CLMA select these companies? Well, according to BlackRock, CLMA is built to track the MSCI Asia ex-Japan Climate Action Index, which provides exposure to the top 50% of companies in each Global Industry Classification Standard (GICS) sector, based on factors including approved science-based targets, management of climate risks and green business revenue. Science-based targets are emissions reduction goals that are aligned with the Paris Agreement, which aims to limit global warming to well below 2°C above pre-industrial levels by 2100. Management of climate risks refers to how well companies assess and disclose their exposure to physical and transition risks arising from climate change. Green business revenue refers to how much revenue companies generate from products or services that have a positive environmental impact.

By using these criteria, CLMA aims to capture the opportunities and mitigate the risks associated with the low-carbon transition. For investors with low-carbon transition objectives, CLMA opens access to pioneering companies at the forefront of the low-carbon transition, says BlackRock.
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But how has CLMA performed so far? Well, since its launch on Sept 14, CLMA has gained about 2.5% as of Sept 28, slightly outperforming the MSCI AC Asia ex-Japan Index, which is a broader index that covers all the companies in the region. However, if we look at the historical performance of the MSCI Asia ex-Japan Climate Action Index, which CLMA tracks, we can see that it has been quite volatile in the past few years. According to an Aug 31 index factsheet, the index’s net returns were -6.26% over the prior month and 3.16% over three months. Using data prior to the October 2022 launch, the index would have returned -20.47% in 2022 and -1.73% in 2021, following returns of 22.15% in 2020 and 18.90% in 2019.

So what explains this volatility? Well, one possible reason is that CLMA is heavily concentrated in a few sectors and countries that are more sensitive to market fluctuations and policy changes. For example, as of Aug 31, CLMA had about 40% of its portfolio in information technology stocks, followed by about 20% in consumer discretionary stocks and about 15% in financials stocks. These sectors tend to be more cyclical and growth-oriented, meaning that they perform well when the economy is booming but suffer when the economy is slowing down or facing uncertainties. Moreover, CLMA had about 50% of its portfolio in China stocks, followed by about 20% in Taiwan stocks and about 10% in India stocks. These countries have been facing various challenges such as regulatory crackdowns, geopolitical tensions, and Covid-19 outbreaks, which have affected their stock market performance.

Another possible reason for CLMA’s volatility is that it is exposed to some companies that have high carbon emissions or face high climate risks, despite its ESG criteria. For example, one of CLMA’s top holdings as of Aug 31 was Reliance Industries, an Indian conglomerate that operates in various sectors such as oil and gas, petrochemicals, telecommunications, and retail. Reliance Industries is one of the largest emitters of greenhouse gases in India, and it has been criticized by environmental groups for its involvement in coal mining and coal-fired power plants. Although Reliance Industries has announced plans to become net-zero by 2035 and invest in renewable energy and green hydrogen, some analysts have questioned the feasibility and credibility of its ambitions.
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​So what does this mean for investors who are interested in CLMA? Well, as with any investment, there are pros and cons to consider before making a decision. On the one hand, CLMA offers a unique opportunity to invest in some of the most innovative and sustainable companies in Asia Pacific ex-Japan, which could benefit from the global shift to a low-carbon economy. On the other hand, CLMA also comes with higher risks and costs than other ETFs that track broader or more diversified indexes. For example, CLMA has an annual management fee of 0.18%, which is higher than some other ETFs that track similar regions or themes. Moreover, CLMA may face challenges such as market volatility, regulatory uncertainty, climate-related litigation, or greenwashing, which could affect its performance or reputation.

Therefore, before investing in CLMA or any other ETF, it is important to do your own research, understand your risk appetite and investment goals, and consult a professional financial advisor if necessary. Remember that past performance is not indicative of future results, and that investing involves risks that you may lose some or all of your money.

Hi everyone, welcome back to The Investing Iguana, where we talk about all things related to investing and personal finance. I’m your host, Iggy, and today we’re going to do a deep dive into Frasers Centrepoint Trust, or FCT for short.

FCT is a retail real estate investment trust (REIT) that owns and invests in suburban shopping malls in Singapore. As of March 8, 2023, it has a market capitalization of about S$7.1 billion.
In this video, we’ll look at FCT’s portfolio, financial performance, growth prospects, dividend history, valuation, and risks. So grab your popcorn and buckle up, because this is going to be a fun and informative ride.

FCT's portfolio consists of 10 suburban malls in Singapore. These are:

• Causeway Point
• Northpoint City North Wing
• Anchorpoint
• Yew Tee Point
• Bedok Point
• Changi City Point
• Waterway Point
• Tiong Bahru Plaza
• White Sands
• Century Square

These malls are strategically located near residential areas and transportation hubs, making them convenient for shoppers. They also cater to the needs of the local communities by providing a mix of stores, including necessity spending, food and beverage, and essential services. FCT's malls have a total net lettable area of about 2.9 million square feet and over 1,800 leases. As of March 31, 2023, FCT's retail portfolio had a committed occupancy rate of 99.2%. 

FCT also owns a 31.15% stake in PGIM Real Estate AsiaRetail Fund Limited (ARF). ARF is a private fund that owns six retail malls in Singapore, two retail malls in Malaysia, one retail mall in Japan, and one office property in China. FCT acquired its stake in ARF in October 2019 for S$1.06 billion. This was a strategic move to increase its exposure to the suburban retail sector and diversify its income streams.

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FCT has a strong sponsor in Frasers Property Limited (FPL). FPL is a multinational real estate company that owns, develops, and manages a diverse portfolio of properties across Singapore, Australia, Europe, China, and Southeast Asia. FPL provides FCT with pipeline support, operational synergies, and financial backing. As of March 31, 2023, FPL holds a 41.4% stake in FCT, which aligns its interests with those of FCT's unitholders.

FCT has delivered consistent financial performance over the years. From fiscal year (FY) 2018 to FY 2022, FCT's revenue grew from S$382.7 million to S$487.5 million, representing a compound annual growth rate (CAGR) of 6.2%. Its net property income (NPI) grew from S$277 million to S$353.7 million, representing a CAGR of 6.3%. Its distributable income grew from S$200 million to S$247 million, representing a CAGR of 5.4%. Its distribution per unit (DPU) grew from 12 cents to 12.07 cents, representing a CAGR of 0.1%. The slight increase in DPU was due to the enlarged unit base after the acquisition of ARF and the equity fundraising in 2019.
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In the first half of 2023, FCT's revenue increased by 23.8% to S$261 million. Its NPI increased by 25% to S$189.4 million. Its distributable income increased by 26% to S$136 million. Its DPU increased by 25% to 6.68 cents. These results were mainly driven by the recovery of shopper traffic and tenant sales, the full contribution from annual rent review (ARF), and the absence of rental rebates given to tenants in the previous year due to the pandemic.

FCT has a strong balance sheet and a prudent capital management strategy. As of March 31, 2023, FCT's total assets were valued at S$7.1 billion. Its total borrowings were S$2.4 billion, giving it a gearing ratio of 33.9%, which is well below the regulatory limit of 50%. Its average cost of debt was 2.4%, which is relatively low compared to its peers. Its average debt maturity was 3.5 years, which is fairly long and reduces refinancing risk. Its interest coverage ratio was 5.4 times, which is comfortably above the minimum requirement of 2.5 times. FCT also has a high proportion of unencumbered assets (96.7%) and a diversified debt profile (52% fixed rate and 48% floating rate). FCT has an investment grade credit rating of BBB+ from Standard & Poor's and Baa2 from Moody's, which reflects its strong credit quality and financial flexibility.
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FCT, a Singapore-based retail REIT, has a positive outlook and growth potential for the future. The company's malls are expected to benefit from the gradual easing of COVID-19 restrictions, the improvement of consumer sentiment, and the increase of vaccination rates in Singapore. In addition, FCT's malls are well-positioned to capture the growth of suburban retail demand, as more people work from home and shop near their residences.
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As of March 31, 2023, FCT's malls have a low average rental reversion rate of -1.1%. This means that there is room for rental growth when the leases are renewed or replaced. FCT also has several asset enhancement initiatives (AEIs) in the pipeline, which are expected to improve the attractiveness and competitiveness of its malls. These AEIs include the renovation of Anchorpoint, the reconfiguration of YewTee Point, and the upgrading of Northpoint City North Wing.

In addition to organic growth, FCT also has opportunities to grow through acquisitions and developments. The company has a right of first refusal (ROFR) from its sponsor to acquire five retail properties in Singapore. These properties have a total net lettable area of about 1 million square feet and a total valuation of about S$1.7 billion. FCT also has a ROFR to acquire Frasers Tower, an office property in Singapore with a net lettable area of about 663,000 square feet and a valuation of about S$1.9 billion.
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​​FCT has a history of paying stable and growing dividends to its unitholders. It has paid dividends every year since its listing in 2006. The dividends have increased from 6.31 cents per unit in FY2007 to 12.07 cents per unit in FY2022, representing a compound annual growth rate (CAGR) of 5.9%.

FCT's dividends are supported by its resilient portfolio, strong cash flow generation, and prudent payout policy. It pays out at least 90% of its distributable income as dividends every year. As of 31 August 2023, FCT's dividend yield was 5.4%, based on its last done price of S$2.24 per unit and its annualised DPU of 12.12 cents per unit for FY2023. This is higher than the average dividend yield of Singapore REITs, which was about 4% as of June 2023.

FCT's valuation is reasonable compared to its peers and historical averages. As of 31 August 2023, its price-to-book (P/B) ratio was 1.18, based on its last done price of S$2.24 per unit and its net asset value (NAV) per unit of S$1.90 as of 31 March 2023. This is lower than the average P/B ratio of Singapore REITs, which was about 1.25 as of June 2023. FCT's P/B ratio is also lower than its five-year average P/B ratio of 1.32, which means that it is trading at a slight discount to its historical value. FCT's P/B ratio is also lower than some of its peers, such as CapitaLand Integrated Commercial Trust (P/B of 1.28), Mapletree Commercial Trust (P/B of 1.38), and Lendlease Global Commercial REIT (P/B of 1.25).

FCT's valuation is also supported by its growth prospects, dividend yield, and quality portfolio. It has a positive rental reversion potential, a pipeline of asset enhancement initiatives (AEIs) and acquisitions, and a stake in Ascendas Real Estate Fund (ARF) that provides diversification and income stability. FCT has a high dividend yield that is attractive to income-seeking investors. It also has a quality portfolio of suburban malls that are resilient, well-located, and well-managed.
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FCT, however, is not without risks. FCT faces the risk of competition from other retail players, both online and offline. FCT’s malls may lose their appeal and market share to newer and more innovative malls, or to e-commerce platforms that offer more convenience and variety. FCT also faces the risk of tenant defaults or vacancies, especially in the current uncertain economic environment due to the pandemic. FCT’s rental income may be affected by the inability or unwillingness of some tenants to pay their rents, or by the difficulty of finding new tenants to fill up the vacant spaces.

FCT also faces the risk of interest rate fluctuations, currency movements, and regulatory changes. FCT’s borrowings are partly exposed to floating interest rates, which means that its interest expenses may increase if the interest rates rise. FCT’s stake in ARF is denominated in foreign currencies, which means that its income from ARF may fluctuate due to exchange rate movements. FCT’s operations are subject to various laws and regulations in Singapore and other countries where ARF operates, which means that any changes in these laws and regulations may affect its business activities and performance.
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FCT faces the following risks in 2023:

• Competition from other retail players. FCT's malls may lose their appeal and market share to newer and more innovative malls, or to e-commerce platforms that offer more convenience and variety.
• Tenant defaults or vacancies. FCT's rental income may be affected by the inability or unwillingness of some tenants to pay their rents, or by the difficulty of finding new tenants to fill up the vacant spaces.
• Interest rate fluctuations. FCT's borrowings are partly exposed to floating interest rates, which means that its interest expenses may increase if the interest rates rise.
• Currency movements. FCT's stake in ARF is denominated in foreign currencies, which means that its income from ARF may fluctuate due to exchange rate movements.
• Regulatory changes. FCT's operations are subject to various laws and regulations in Singapore and other countries where ARF operates, which means that any changes in these laws and regulations may affect its business activities and performance.

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So, what do I think of FCT as an investment? Well, I think FCT is a solid REIT that offers a stable and growing income stream, a reasonable valuation, and a quality portfolio of suburban malls. I think FCT is well-positioned to benefit from the recovery of the retail sector in Singapore and the region, as well as from its growth initiatives and sponsor support. I think FCT is a good addition to any diversified portfolio of REITs or dividend stocks.

However, I also think that FCT is not without risks and challenges. I think FCT needs to constantly innovate and adapt to the changing consumer preferences and behaviours, as well as to the competitive landscape of the retail industry. I think FCT needs to maintain its prudent capital management and financial discipline, as well as to monitor its exposure to interest rate, currency, and regulatory risks.

Therefore, I would rate FCT as a buy with a target price of S$2.50 per unit, which implies a P/B ratio of 1.32 (its five-year average) and a dividend yield of 4.8%. This represents a potential upside of 11.6% from its last done price of S$2.24 per unit as of 31 August 2023.
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That’s all for today’s video on Frasers Centrepoint Trust. I hope you enjoyed it and learned something new. If you did, please give this video a thumbs up and share it with your friends and family who are interested in investing or personal finance. And if you haven’t already, please subscribe to my channel and hit the bell icon so you won’t miss any of my future videos.